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Understand your insurance coverage before a natural disaster stikes

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Last week, Hurricane Sandy, the second natural disaster to hit the Washington region in less than six months, left many homeowners scrambling to find help to fix the trail of destruction left in its wake.

We asked J. Robert Hunter, director of insurance at Consumer Federation of America, in an e-mail exchange for tips on working with your insurance company and finding a reputable contractor to make needed repairs to your home.

Can you spell out what in general an insurance company will cover and not cover regarding things like home repair, flood damage, mold that resulted from water, food lost in the refrigerator during a power outage, replacement of possessions and damage from a tree that fell on a house?

Insuers must cover what the policy says they cover so, ultimately, that will drive the outcome. But generally most home insurers — not all — do not cover flooding, earthquake, mold , food loss from power outage, trees falling in a yard. They do cover damage caused by a fallen tree to a structure and, if such damage exists, the insurance will also cover tree removal. Possessions are covered and, of course, the structural damage is covered subject to a deductible — either a dollar amount the consumer selected or an imposed hurricane deductible if the storm is a hurricane.

I understand that consumers can shoot themselves in the foot by how they phrase their claims, particularly for water damage. How can a homeowner best characterize losses to increase the chances that the insurance company will cover water damage?

If you have a flood insurance policy, flood is covered but not rain coming through a damaged roof or window. Private homeowners insurance covers that damage.

[If you don’t have flood insurance], you should tell the truth, but if both are occurring emphasize the water through the roof or window aspect.

With so many people seeking hurricane relief, what can a homeowner do to get his claim expedited or to minimize errors that might delay its processing?

Make your claim early — this is a first-come, first-served process except for claims for additional living expense, such as hotel bills, which will be paid ASAP.

What are the steps involved in the process and how long does it generally take?

Most damage claims should be finalized in 30 days. Large complex claims take longer but real initial offers to help you get started rebuilding should come no later than 60 days out.

How much help can a homeowner expect from the insurance company in finding a good contractor to repair his home?

Insurance companies may look more for low cost than quality repair so carefully vet any suggestion they send you.

How can a homeowner avoid getting taken in by one of those scam contractors who manage to show up whenever there’s a natural disaster like Hurricane Sandy?

Like shopping for anything, check references and look at Washington Consumer’s Checkbook for ranking of contractors for quality and cost.

Also, be sure the contractor is licensed and has insurance and get several contractors to bid on the repairs. Ask if the contractor did some work nearby that you could look at and even chat with the owner of that home about their satisfaction with the work.

What recourse does a homeowner have if the insurance company denies her claim or low balls her?

People with claims should immediately start keeping good records of their interactions with the insurer and the adjuster. This will help if you have a complaint.

If the claim is denied or you feel the offer is too low, demand that the company identify the language in your homeowners’ policy that served as a basis for denying your claim or offering so little. . . . The company may have slipped new limitations into the policy and not adequately informed you. If you feel that you have been misled in this regard, it might be a good idea to consult an attorney. . . .

Once the insurance company tells you the reasons for its action, it cannot produce new reasons for denying payment or making a low offer at a later time. You have locked them in — a major advantage for the consumer. If you review the policy and find that, under a reasonable reading, you think you are entitled to the full amount of your claim as you read the language they relied upon, you will likely win if you go to court. Courts consistently rule that if an insurance policy is ambiguous, the reasonable expectation of the insured party will prevail since the consumer played no part in writing the language of the insurance policy.

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